May 17, 2024
Good evening, Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Subject: Support for the SEC’s Decision to Reject the OCC’s Proposed Rule Change Dear Commissioners, I am writing to express my strong support for the Securities and Exchange Commission’s (SEC) recent decision to reject the Options Clearing Corporation’s (OCC) proposed rule change. The SEC’s stance on this matter underscores the paramount importance of transparency, risk mitigation, and investor protection in maintaining the integrity and fairness of our financial markets. Firstly, the lack of transparency in the OCC's proposal is a significant concern. The proposed rule change did not provide sufficient clarity on the methodologies and assumptions underpinning the new margin requirements. This opacity could impede market participants' ability to fully understand and anticipate margin adjustments, undermining confidence in the market's stability and fairness. Transparent practices are fundamental to ensuring that all stakeholders have equitable access to information, which is essential for making informed decisions and maintaining trust in the financial system. Furthermore, the potential systemic risks associated with margin requirement adjustments during periods of market volatility cannot be overstated. The OCC's proposal could exacerbate market instability by allowing for substantial changes in margin requirements precisely when markets are most vulnerable. This reactive approach could lead to a procyclical effect, where increased margin calls during market downturns could force liquidations, further driving down asset prices and exacerbating volatility. The SEC's decision helps to safeguard against these systemic risks, thereby promoting a more resilient financial market infrastructure. Another critical issue pertains to the conflict of interest inherent in the role of the Financial Resource Management (FRM) Officer as outlined in the OCC's proposal. The dual responsibilities of the FRM Officer, who would be tasked with both risk management and operational roles, present a clear conflict of interest. This arrangement could compromise the objectivity and efficacy of risk management practices, ultimately endangering the financial system's stability. The SEC's disapproval of this aspect of the proposal is a prudent measure to ensure that risk management functions remain independent and free from conflicting interests. The SEC’s decision aligns with its mandate to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. By rejecting the OCC’s proposed rule change, the SEC is upholding these core principles and reinforcing the importance of robust regulatory oversight. This decision helps to ensure that the infrastructure supporting our financial markets operates with the highest standards of transparency, fairness, and risk management. In conclusion, I commend the SEC for its careful consideration and decisive action in this matter. The protection of investors and the mitigation of systemic risks are critical to the health and stability of our financial markets. The SEC’s decision is a vital step in upholding these priorities, and I fully support this judicious outcome. Thank you for your attention to this important issue. I trust that the SEC will continue to act in the best interests of the market and its participants. Sincerely, Kind regards, Samuel Motac